06/11/2013

Entran en vigencia modificaciones a la Ley de Impuesto a las Ganancias – Transferencia de acciones y dividendos

On September 23, 2013 Law No. 26,893 was enacted and published in the Official Gazette.  This law introduced several amendments to the Argentine Income Tax Law (“Income Tax Law”).

  1. Income Tax on Transfer of Shares and Other Securities:

Firstly, this amendment provides that, as from its enactment, the results derived from the sale, exchange or disposal of shares, debentures, titles, bonds and other securities which are not publicly traded in stock or securities exchange markets will be taxable. In this regard, it is noteworthy that the regulation of the Argentine Tax Authorities of this amendment provided that the exemption for shares, debentures, titles, bonds and other securities publicly traded in stock markets shall only be applicable for stock markets regulated by the local Argentine Securities Commission, therefore, transfers of shares bonds and other securities in stock exchanges other than Argentine stock exchanges will be subject to income tax in Argentina.   Only individuals and undivided estates resident in Argentina will be subject to the tax; and additionally, the amendment revokes the exemption, which was available to foreign individual and foreign entities; hence now Income Tax Law will reach the latter as well.   The amendment provides that the sale, exchange or disposal of shares, debentures, titles, bonds and other securities obtained by individuals and undivided estates will be taxed at a fifteen per cent (15%) rate of the actual profit.  The regulation of the tax authorities, in addition, provides that the profit shall be calculated in pesos as of the date of the occurrence of the relevant transactions; therefore the purchase of a security shall be calculated in pesos (even securities denominated in foreign currency) and the sale shall also be calculated in pesos at the time of the disposition of the relevant securities.  This is quite complicated in Argentina where we have an inflation of 35% per year because for example the rate of exchange of the peso vis-à-vis the US dollar one year ago (July 23rd 2013) was AR$ 5.47 and today (July 23rd 2014) is AR$8.18.  Therefore, if you purchased a security in July 2013 for US$ 100 and sold it today for US$ 100 (hence made no profit in dollar terms) for the Argentine tax authorities you made a profit of AR$ 271 and therefore should pay income tax for AR$ 40.65 (15% of AR$ 271) because in addition it is not permitted to adjust results by inflation in Argentina.

  1. Tax on Dividends:

Finally, regarding dividends or profits distributed by companies included in the subsection a) of section 69 of the Income Tax law, these results will be taxed at a rate of ten per cent (10%) in addition of the relevant income tax of 35% of the profits of the relevant company.  This tax on dividends is applicable as from the date upon which the dividend distribution is approved and such dividends are put at the disposal of the shareholders and shall be withheld by the relevant company paying the dividends, irrespective on whether the shareholders received the funds or not.   This tax on dividends is applicable for financial statements and dividends to be distributed as of October 2013.